Home

Apple US fined $9 million for misleading some Australian customers

Apple has been fined $9 million by the Federal Court for telling some Australian iPad and iPhone owners they could not have devices fixed as they had been previously repaired by a third party.

The court action was started by the Australian Competition and Consumer Commission (ACCC) after it received complaints about 'error 53', which disabled some Apple devices after an operating system update was downloaded.

"[The customers said] they were being refused a remedy of any kind by Apple on the basis that their device had had unauthorised repairs, and those repairs could be as minor as just having a cracked screen replaced on an iPhone or iPad, which all of us need to do from time to time," ACCC Commissioner Sarah Court said.

"So these consumers were being told, 'because you've had this third party repair, you are not entitled to any remedy'."

Ms. Court said that is not the case under Australian Consumer Law.

"Customers and consumers are free to have screens and other repairs are done on their devices by third-party repairers, so long as that repair doesn’t damage the underlying system of the phone," she said.

Apple US has admitted that between February 2015 and February 2016 it made false and misleading statements to consumers. The ACCC identified at least 275 individual customers who were affected, but Ms. Court said it was "fairly widespread".

"The same representations were made more broadly for a couple of months on Apple's website as well, so we can't quantify how many of those consumers saw that," she said.

"After the ACCC contacted Apple it did a bit of its own investigation and had an outreach program that reached about 5000 consumers who may have been affected."

The commissioner said it was "very important" the American head office of Apple was paying the penalty.

"We take a strong line in relation to international companies operating in Australia," she said.

"If you want to sell your product into this market then our provisions apply and you need to adhere to those, and clearly that's what the court has found here.

"Importantly Apple has recognized that, and will take that on board going forward."

The commissioner said the Australian arm of Apple also offered a court enforceable undertaking to "not engage in this kind of conduct in the future".

In a statement, an Apple spokesperson said the company has been operating in Australia for 35 years and works hard to "offer our customers the best possible service".

"We’re constantly looking for ways to enhance the service we deliver and we had very productive conversations with the ACCC about this," the spokesperson said.

"We will continue to do all we can to deliver excellent service to all of our customers in Australia.”